My KCQ’s about the 2014 annual report:



Assignment # 1: Step 2 part 1Company backgroundThe company I have been assigned for this assignment is Connect Group PLC. I have posted a brief intro to my company on my blog, it can be found here: now I will write a more in-depth background.Connect Group PLC is a predominantly UK based company that supplies and distributes in the media and news markets. The company consists of over 20 subsidiaries who are involved in a range of activities across the four divisions Connect Group is made up of (which I will briefly detail later).Condensed history of companyThe Connect Group PLC formed after a demerger with WH Smith PLC in 2006, however at the time it was trading under the name Smiths News PLC. In 2006 it was a single business that had a 39% of the market share in newspapers and magazines distribution. Over the next few years it quickly evolved into a powerhouse, wining contracts with some of the biggest names in book suppliers (Bertrams and Dawson Books most notably) and seeing an increase of 40% in market shares from the winning of ?459m in contracts from various publishers. By 2011, Smiths News was seeing annual revenues of ?34m. Thus the first two divisions of operation were created (Connect News and Media and Connect Books as they are now known). 2012 saw the acquisition of The Consortium (which was the foundation of the establishment of the Education and Care division). Smiths News extended their contract with the company until 2019 bringing with it ? of all revenue annually. Also another gain for the books division – the acquisition of Wordery (a third-party seller through amazon and eBay), that brings with it direct to customer sales and expansion to the European market. 2013 had the company expanding further into the European market and acquiring international academic book contracts. This last year has been busy for Connect Group. It seen the company undergo rebranding from Smiths News PLC to Connect Group PLC, a change they feel harmonises more with the company’s desire to gain diversity in services provided and their ambition to grow and pursue new ventures. The fourth and newest division of Connect group, Connect Parcel Freight, was created with the acquisition of Tuffnells Parcels Express and new ventures Pass my Parcel and Jack’s Beans were put into effect.Four divisions of Connect Group PLC at a glance:Connect News & Mediadistributes magazines & newspapers on behalf of UK’s major national publishersinternational supplier of in-flight media entertainment to various airlinescurrently undertaking new ventures in “Pass my Parcel” and “Jack’s Beans”Connect Bookssupplier and distributor of print & digital books from popular brandslarge range of titles (and access to more) which includes academic publicationsserves + 8,000 customers in 100 countries across UK and EuropeConnect Education & Caresupplies education and care products to learning facilities and care centres across the UK supplies products for all budget typesprovide fire and rescue organisations with specialist equipmentConnect Parcel Freightlocal (currently branching out into foreign countries) distribution service specialising in irregular and awkward item deliveryhave high efficiency stands which ensure reduced possibility of damage to itemsdaily deliveries to over 4,000 customers and essential supply chainsThis information was found using a combination of the 2014 annual report and accessing the company website.Assignment # 1: Step 2 part 2My KCQ’s about the 2014 annual report:What does PLC mean?Why rebrand now after 6 years of trading?What does Connect Education and Care do?What is the Jack’s Beans and Pass my Parcel ventures?I found answers to most of my KCQ’s whilst reading the annual report and browsing the company website, the answers to them are in the company background above. However I had to look elsewhere for the definition of PLC. I entered it as a search term into Google and it came up with a definition from Investopedia which gives the legal definition of PLC – Public Limited Company. Basically it is a term commonly used in the UK (where my company is based) and applies to companies ran by two or more people. PLC is a legal description of a company that has public sales of shares and claims limited liability to those shares i.e. the stock can be bought by anyone and the holders of said stock will only loose the amount they paid for their shares. The PLC also means that it is a company listed on the London stock exchange which would make it a reporting entity. Investopedia can be found here: KCQ’s about the financial statements:What is a demerger reserve?What is an ESOP reserve?What is a hedging & transition reserve?What are derivative financial instruments?What the difference is between called up share capital and share capital?What is the company’s income tax expense?Answers to these questions can be found in the footnotes of the report. They make for very in-depth and lengthy reading. I still can’t make heads or tails of much of what is said although I guess that comes with practice and a deeper knowledge of accounting. I can see the advantages of having footnotes though as the report could be even more confusing to read for perspective investors or other interested parties. Areas of the business I find important or interesting:Connect Group has strong views on giving back to the community. Employees are encouraged to pursue volunteering opportunities and fundraising activities that they deem important. Last year a massive ?80,000 was raised for a number of different causes. Also the company, in particular the Connect Education and Care division, is involved in a program which encourages literacy skill development in primary schools called Stickability, which is run by the Bath Rugby Foundation. Stickability utilises both classrooms sessions and outdoor activities to demonstrate that learning is fun. These programs run for six weeks at a time and are conducted by Connect Education and Care volunteers, literacy specialist and members of the Bath Rugby team. Stickability was started two years ago and has helped 19 schools and over 700 children. Due to the programme’s success, Stickability has been renewed for a further two years and has expanded its geographical reach.The Connect Group board of directors has said it the annual report that it recognises that diversity in all forms is essential to the achievements of the group’s objectives. However out of the 13 members of the board, only one was a woman. How is that diverse? The report goes on to explain that it has a range of strategies to promote gender equality in roles, for example training programs for promotions, however there are no women in roles of leadership. Why is this? Is it lack of drive in the women of the company? Are they currently happy in their jobs and don’t wish for advancement? Or does an almost all male leadership panel intimidate those wishing to advance?Challenges within the firmOne of the bigger divisions with the firm, Connect Books, is currently underperforming with an underlying operating profit of ?2.5m, which is down 65.7% from 2013. This can be attributed to an increase in competitive activity, difficult trading conditions, a slower return of investments and a change in product mix. Connect Group have a well thought out plan ready to implement to combat these abysmal returns and get the division back on it’s feet.Firstly the current Managing Director has decided to step down and promote a new replacement who will lead a change up in division management. Next, monthly performance reviews will be made to monitor any developments and keep the board of directors in the loop with what is going on. The company will also make further investments to strengthen company division in online sales by upgrading their technology. However, the company has already undergone efficiency changes in their packing warehouse in Norwich which consisted of downsizing the work force and introducing flexible working hours, a move they hope will keep up with online orders and deliveries’.In my opinion only time will tell if these measures will be effective in generating better returns in the next financial year. I say this only because with the way technology is going now, more and more people are investing in e-readers and the like, which will eventually make hard copies of anything obsolete. Assignment # 2: Step 2 part 4Happiness with firmAm I happy with my firm? Yes and no. I am happy that the company isn’t too complex as I have found their website easily to navigate and they have loads of information readily available. However it’s just a news and media company. Although I love books, it’s just a little boring to me and I tried to get interested in it but I just couldn’t. At first there was a mix up when I first found out what my company was. I was given my company’s old trading name (Smiths News PLC) and the link went to a completely different company’s website. Now that company was interesting. They did everything! They were the company who made the first ultrasound machine and had invented a special guard for medical syringes to stop accidental prick injuries which would lower the chances of spreading disease. Apart from medical, they had sectors in security (bomb detection), aviation, news, technologies and the list goes on. A company like that would have been a challenge yes, but it would have been a good challenge.ConcernsI am concerned that I have misinterpreted the assignment brief. I have never done anything like this before and it has been challenging. This is my first term of my bachelor’s degree, I have never done anything remotely like accounting either, and I don’t feel qualified to be passing judgements over a company’s performance, and are they in trouble and will their measures of fixing it pan out? I have my sights on getting a high mark throughout this course, and I am worried that if I don’t do well on this assignment I will lose my enthusiasm and drive to keep going.Assessment # 1: Step 4 –Ideas, reflections and reactionsChapter 1 – A way of viewing businessAt first the technical terms are bit confusing, I kept thinking that a glossary would be nice, so I started to write my own notes as well as highlighting important sections. Sometimes I felt the explanations were a bit long winded, however this gave me a chance to determine what I think was important and use the information to string together my own definition and not interesting facts in my own words – like making quick notes for revision.I like that I am allowed to draw my own conclusion about what accounting is. It is a very different process to my previous learning experiences and at first it felt overwhelming but the more I read and contemplated things, the more I felt free to engage with the information. So far accounting seems much more complex than I initially thought and it changes the more I read throughout the chapters. I was unaware that most company directors had accounting backgrounds. I kept thinking is this a requirement for everyone in business, or just big business? Should I pursue accounting as my second major together with management for my own personal future business plans? I would have liked to see some examples of journals and ledgers to with the written explanation. It would have helped with the grasping of double entry accounting. I also wanted to know when we would actually be getting hands on experience with numbers. Looking at copious amounts of written information is all well and good, but some people learn better with numbers and hands on work. Am I in the wrong course for that? Maybe, instead of looking further into accounting, I should look at a bookkeeping course (which I’m leaning strongly towards). Are they different or does one lead into the other? I’m going to have to look further into this.I felt the same with the accounting equations. They are interesting to learn but where are the examples to go with the formula? Ditto for the extended accounting equation, it makes it seem so daunting. I tried using the financials for my company for reference, just to have a go with it, but they are so hard to understand and it just wasn’t helpful at all. An example would be really helpful. After reading the chapter twice, and some parts three times, I found it raised more questions than it answered, which may even be Martin’s intention. But it just felt so… I just wanted to learn more or ask a whole bunch of questions. How can a sole-trader operator separate its self from the business? If we are going to be studying accounting by examining large companies, when will I get to see an inside look of small business? When, if ever, are we going to do some practical work? I can’t wait to try some exercises in working with the accounting equations. Are we going to be able to work with journals and ledgers to experience double entry accounting? Lastly, the course is called “Using accounting for decision making”, when are we going to actually use accounting and make decisions??Chapter 3 – Introducing financial statementsI love the idea of introducing financial statements like people at a party. The balance sheet was explained in clear easy to understand terms. The examples given were helpful too. The same goes with income statements and cash flow introduction. The referencing back to chapter one helped reinforce previous concepts learned. However the statement of changes in equity section seemed to gloss over the basics and left me wanting to know more. How can I read and understand it if I don’t have a full and proper explanation?I was not surprised that the Greeks “invented” ratios as they were a very curious and insightful people. The ratios section as a whole was boring and I just couldn’t keep engaged with the reading material. I am not sure as to why this was though. Don’t get me wrong, there was interesting facts in that section. It might have been that by that point I was in information overload or I just needed a big long break. I will endeavour to go back and re-read it again though. Like earlier in my analysis of chapter one, an example or exercise here might help to get the reader actively engaged and participating.The concept of dividends is both exciting and perplexing. How can a formula even be used to predict what future dividends will be when there is no guarantee on how the company will perform? Again an example or activity or something would have been useful here to explain the relationship of dividends and cash flow.Overall I did enjoy learning about the four financial statements but I was disappointed in the lack of numerical examples that could have helped explain ratios and dividends in a clearer way for me. ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download